AREP Lands $27M Mezzanine Loan for D.C. Multifamily Conversion

The adaptive reuse project will refurbish a former office in Old Town Alexandria.

The project will have 199 units and open in fall 2025. Image courtesy of American Real Estate Partners

American Real Estate Partners has landed additional financing for a project in Alexandria, Va., that will convert an office building into a residential property. Newmark’s Joe Donato, Kevin Ridgway and Andrew Gaffney arranged the $26.1 million five-year interest-only mezzanine loan, which was originated by investment funds managed by Mesa West Capital. The loan is part of an overall debt package that was recently provided by Bank OZK.

Built in 1984, the 1101 King Street building has 200,000 square feet of space located throughout its seven stories. AREP’s Strategic Opportunity Fund III acquired the property in September 2022, with plans to transform the office building into CityHouse Old Town. AREP has already started the conversion process and is planning to start preleasing for the community in summer 2025. Full completion is scheduled for that fall.

Once completed, CityHouse Old Town will offer 199 units comprised of one-, two- and three-bedroom units which range from 572 to 1,394 square feet. Units will be built with nine-foot ceilings, stainless steel appliances, quartz countertops and custom closets, while select units will also get terraces. The community’s amenities will include a courtyard garden, lobby lounge, private club suite, fitness center, pet spa and concierge services.

Located within the city’s Old Town Alexandria neighborhood, 1101 King Street will be within walking distance of the area’s many retail and restaurant options and will also offer a short commute to the Old Town Alexandria Waterfront. Residents will be near the King Street metro station, which connects to the Pentagon, Ronald Reagan Washington National Airport and Washington, D.C.

Working on a second Virginia project

As a company headquartered in the greater Washington, D.C. area, AREP’s portfolio mostly consists of properties located in Virginia, but has holdings across the U.S., including in Nevada, New Jersey, North Carolina.

While its portfolio mostly includes offices, AREP also has a second multifamily property to go with its upcoming CityHouse Old Town project. In August 2023, AREP partnered with Rithm Capital Corp. and GreenBarn Investment Group to acquire CityHouse Ashburn Station, a 200-unit single-family rental community in Ashburn, Va., for $120 million.